When Do You Recommend Someone Go With Whole Life Insurance?

When do you recommend someone go with whole life insurance? Even though a whole life policy premium does not change over time, it can still cost more money if you are older or not in good health. Deciding...

Deciding what type of life insurance you need can be a difficult process. You need to know exactly what you want out of your policy and what your individual family needs are. One kind of insurance policy that is very popular today is the "whole life" insurance policy, otherwise known as, "permanent" life insurance. If you are looking to have a life insurance policy that you are going to keep for the long haul, permanent whole life insurance is for you.

Whole life policies are very versatile because they are not only life insurance, but also very versatile investment tools. Although a whole life policy has many more options than a term life policy it can also be one of the most expensive kinds of life insurance you can buy so you should be sure it is really right for you.

Joe Sostarich, a 26-year veteran of life insurance sales and management says, "I recommend whole life insurance for most people because the premiums are level, that means they never change." Some term life insurance policies have increasing premiums as the term progresses and the insured ages. Whole life policies have a set premium that does not go up. This can be a good option if you are looking for a stable premium payment that you know you will be able to afford as the years progress. Though the premiums will never increase, they usually are much higher than the premiums of other kinds of life insurance due to the savings component of the policy. Joe says, "A whole life insurance policy's premiums are higher because your policy builds cash value as you go along." Whole life policies usually guarantee a specific rate of interest on their growing cash value and the cash value is tax-deferred.

Since a whole life policy will build cash value, an insured can use it to his advantage in several ways. In the event of financial need, loans can be drawn against the cash value of your policy. The cash value can also be used to pay the premiums of the policy for a certain amount of time. The cash value of a whole life policy can also be used to supplement retirement income. If you do not have any sort of retirement plan or pension plan and you want to insure a source of income to supplement social security, the whole life policy can provide that.

Some of the drawbacks of a whole life policy could make it a less favorable option. In the first year of your policy, you will not be building cash value so much as paying for costly commissions on your policy. In addition, if you choose to cash in your policy you may have to pay surrender fees. You may also be able to earn more money with other types of investments such as mutual funds if you are looking for a supplement to your retirement.

As with any type of insurance policy, you will be subject to a health history interview and routine blood tests. Some companies require a physical. Even though a whole life policy premium does not change over time, it can still cost more money if you are older or not in good health.

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